Ecopetrol budgets $1B less per year for investment through 2020

On Tuesday, Colombian state-owned oil company Ecopetrol published its 5-year strategic plan, which projects an annual investment budget of just $6 billion through 2020. The annual exploration budget will lie between $1 billion and $1.5 billion, with an additional $4 billion invested annually in boosting production and efficiency at existing fields.  Ecopetrol hopes to boost its production by 1 to 2% each year, with the goal of producing approximately 870,000 bpde in 2020.

Reuters noted that the reductions in spending are part of a recent cost-cutting drive by Ecopetrol to save the company $6 billion in costs from now through the end of the decade.

On Tuesday, Colombian finance minister Mauricio Cárdenas and Colombian mining minister Tomás González testified before the Colombian Senate, as the legislative body debated the Santos government’s oil policy. Senators were worried about the country’s oil self-sufficiency in light of the country’s shrinking oil reserves and the minimal amount of oil exploration.

Minister González agreed that oil exploration has slowed considerable and that new initiatives will need to be considered to encourage oil companies to invest in the country. He warned that if Colombia should prove unable to stimulate exploration, its production would fall. Minister Cárdenas added that the lack of exploration is due simply to the fall in oil prices and that Colombia will need to be create to counteract that market trend.

Fortunately for the Colombian oil sector, American companies have started lining up to present proposals for developing Colombia’s fracking potential. The Colombian government knows that the best way to grow the country’s oil reserves is to use hydraulic fracturing to extract otherwise-inaccessible oil.